Medicare Payment Policy

with a difference of at least $12 in a beneficiary’s expected
monthly OOP costs between the two enhanced plan offerings.
15 The actual cost-sharing amount for brand-name drugs will
depend on the amount of dispensing fee charged by a plan
since the 2.5 percent covered by the Part D benefit applies to
both the ingredient cost and the dispensing fee, while the 50
percent manufacturer discount applies only to the ingredient
cost.
16 Prior authorization refers to requirements for preapproval
from a plan before coverage. Quantity limits refer to a plan
limiting the number of doses of a particular drug covered in
a given time period. Under step therapy, plans require the
enrollee to try specified drugs before moving to other drugs.
17 Lower subsidy rates apply to higher income beneficiaries. For
more information, refer to the section on enrollee premiums.
18 Manufacturer discounts may also affect employers’ decisions
about retiree drug coverage. If an employer provides a gap
coverage that wraps around the Part D benefit, the discount
is calculated as 50 percent of a beneficiary’s cost-sharing
amount after taking into account the gap coverage offered by
the employer.
19 Based on CMS’s estimate as of September 30, 2012.
20 In 2013, three plans—CVS Caremark Value, Community
CCRx Basic, and Health Net Orange Option 1 (all operated
by CVS Caremark Corporation)—were consolidated into one
plan to form SilverScript. In 2012, CVS Caremark Value used
copays ($6 for generics, $45 for preferred brands, and $95 for
nonpreferred brands), while Community CCRx Basic used
both copays ($2 for generics) and coinsurance (25 percent for
preferred brands and 46 percent for nonpreferred brands).
21 At least 90 percent of urban beneficiaries must live within
2 miles of an in-network pharmacy, at least 90 percent of
suburban beneficiaries must live within 5 miles, and at least
70 percent of rural beneficiaries must live within 15 miles.
22 Several plans report having preferred pharmacies in their
network, but they either consider all in-network pharmacies
as preferred or have no cost-sharing differential between
preferred and nonpreferred pharmacies.
23 Cost-sharing amounts are for region 12 (Alabama–Tennessee
region), with the exception of one plan that was offered only
in region 11 (Florida). Plans have slight differences in cost
sharing from region to region.
24 An individual NDC uniquely identifies the drug’s labeler,
drug, dosage form, strength, and package size. Because each
specific drug often is available in different dosages, strengths,
and package sizes, the same drug typically has many different
NDCs.
25 For this index, Acumen grouped NDCs that are
pharmaceutically identical, aggregating prices across drug
trade names, manufacturers, and package sizes. As a result,
brand-name drugs are grouped with their generics if they
exist, and the median price more closely reflects the degree to
which market share has moved between the two.
26 Because most biologics are injected or infused directly into
the patient, they are more likely to be covered under Medicare
Part B. Consequently, biologics account for a relatively small
share of gross Part D spending. Based on the Commission’s
analysis of 2007 Part D data, spending on biologics totaled
approximately $3.9 billion, or about 6 percent of gross Part D
spending.
27 An antineoplastic drug (Armidex) with about 20 percent
market share lost its patent in the summer of 2010. As a result,
the price index that takes into account generic substitution
dropped during the latter half of 2010 but does not appear to
have significantly affected the price index measured at the
individual NDC level.
28 The Commission’s estimate of the share of enrollees who
voluntarily switched plans may not be directly comparable
to the 6 percent reported by CMS because of methodological
differences.
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